We all know Universal Display stands to make plenty of money from OLED materials and licensing, but what about the encapsulation layer that protects the devices?

Just a few days ago, I singled out OLED technologist Universal Display(NASDAQ:OLED) as one of two stocks to buy for its massive upside over the next five years.

As I noted then, while the stock currently trades for more than 140 times trailing earnings, it's forward price-to-earnings ratio of 20.3 reflects analysts' unrivaled optimism for its future prospects. Of course, you can't blame them for that optimism, given Universal's near monopoly as both a supplier of OLED materials, and the patent owner behind the key intellectual property driving phosphorescent OLED displays.

As a result, Universal Display stands to benefit from every device with an OLED screen, including devices like Nokia's Lumia smartphones, millions of Samsung Galaxy series phones and tablets, and soon-to-be-launched large screen OLED TVs from Samsung, LG, Sony, and Panasonic. If that weren't enough, companies including LG, Philips, Konica Minolta, and GE are also pushing hard to develop high-efficiency solid state OLED lighting solutions, which are not only cool to the touch, but also offer steady, even light, and an incredible range of options for design.

Philips OLED Lumiblade Lamp, Image Source: Philips

But wait, there's more!Smartphones, tablets, TVs, lighting ... those are some huge industry fish to fry for a relatively small company like Universal Display with its $1.4 billion market cap!

One of the most exciting capabilities OLED technology enables across all four of those markets, however, is flexibility. Heck, Nokia demonstrated an OLED phone way back in 2011, which users could quite literally control by flexing the device. Samsung, though, is leading the way as of now with its efforts for commercialization on a wide scale of its YOUM flexible displays announced last year.

However, while the actual OLED portion of these flexible screens is durable enough to withstand multiple hits from a hammer, electronics manufacturers still need an effective way to protect the sensitive materials from environmental elements like moisture and oxygen -- and that's where the encapsulation layer comes in.

Sealing the dealAccording to a recent report from Korea-based Etnews, however, Samsung has recently run into technical hurdles mass producing its current encapsulation technology created by privately held Vitex Systems. Apparently, and unfortunately for Samsung, this existing encapsulation tech simply adds too much time to the manufacturing process.

Fortunately for Universal Display investors (and as I noted after UDC's solid fourth-quarter earnings report), the OLED company has its sights set on encapsulation, too.

In fact, UDC has boasted of its novel single layer encapsulation efforts as far back as 2011, and CEO Steve Abramson reminded us during the most recent earnings conference call in February that they are "discussing potential commercialization roadmaps with a number of partners, and are in the process of developing [their] encapsulation technology business model."

Abramson also went on to note encapsulation "is a similarly critical success factor in the lighting industry, where [Universal Display] is already selling a full phosphorescent material system for warm white light."

That's why, given Universal Display's long-standing relationship with Samsung, I can't help but wonder whether that particular comment was simply a preview of this week's news.

Foolish final thoughtsOne of the biggest long-standing concerns for Universal Display investors remains its current over-reliance on Samsung, which accounted for more than two-thirds of UDC's revenue last year. If Universal Display's encapsulation technology has what it takes to fulfill manufacturer's mass production needs for flexible screens and lighting, it could go a long way toward negating that risk by diversifying the company's revenue streams that much more.

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As a technology and consumer goods specialist for the Fool, Steve looks for responsible businesses that positively shape our lives. Then he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.